The CFPB alleges that the firm operates “like a factory,” producing hundreds of thousands of debt collection lawsuits against consumers on behalf of its clients, mainly major credit card-issuing banks and debt buyers. Between 2009 and 2013 the firm filed more than 350,000 debt collection lawsuits in Georgia alone. The Georgia suits are the focus of the CFPB’s action.

The case was pretty cut and dry: Midland Funding sued Paz for $5,216 on an old credit card debt. Paz, 48, said the amount was more than he owed. But rather than accept the charges, as so many others do, the maintenance man from Alexandria, Va., contacted a legal aid attorney.

That attorney figured out that the amount Midland sought in its sworn affidavit included all sorts of fees that the company lacked the documentation to collect. And when Paz challenged the case on those grounds,

Midland dropped the suit.

Credit card debt is the most common type of defaulted debt [junk debt buyers] buy, but they also snap up portfolios of student loans, medical debt, utility bills, tax liens, car loans and mortgages, according to the Center for Responsible Lending.

The three largest publicly traded debt buyers — Encore, Asta Funding and Portfolio Recovery Associates — spent more than $1.2 billion last year to buy portfolios of debt worth more than $85 billion, according to regulatory filings.

Encore, which owns the debt of one in five Americans, accounted for most of that spending. The company said it files lawsuits in fewer than 5 percent of the open accounts in its total portfolio.